Budget 2021 and how it may affect you
3 March 2021 by Andreea Brindas
If you follow any news channels, you have probably heard over the past few days that Chancellor Rishi Sunak was due to announce the new budget for 2021 for the UK on 3rd March 2021.
The Budget Statements sets out important measures that will be adopted for the UK, broken down as follows:
- Protecting jobs and livelihoods;
- Strengthening the public finances;
- An investment-led discovery; and
- Scotland, Wales, and Northern Ireland.
This blog will address the measures adopted in respect of points 2 to 4 above, but will not touch upon the measures adopted in respect of Covid-19 or Scotland, Wales, and Northern Ireland.
Protecting jobs and livelihoods
- An extension of the Coronavirus Job Support Scheme to September 2021 across the UK.
- An extension of the UK-wide Self Employment Income Support scheme to September 2021, with 600,000 more people who filed a tax return in 2019-20 now able to claim for the first time.
- An extension to the temporary cut in Stamp Duty Land Tax in England and Northern Ireland until September will support the housing market and protect and create jobs.
- A new mortgage guarantee scheme will enable all UK homebuyers to secure a mortgage of up to £600,000 with a 5% deposit.
- £5 billion for new Restart Grants – a one-off cash grant of up to £18,000 for hospitality, accommodation, leisure, personal care, and gym businesses in England.
- A new UK-wide Recovery Loan Scheme to make available loans between £25,001 and £10 million, and asset and invoice finance between £1,000 and £10 million, to help businesses of all sizes through the next stage of recovery.
- Extension of the Film & TV Production Restart scheme in the UK, with an additional £300 million to support theatres, museums, and other cultural organisations in England through the Culture Recovery Fund.
- Six-month extension of the £20 per week Universal Credit uplift in Great Britain, with the Northern Ireland Executive receiving additional funding to match the increase. A one-off payment of £500 to eligible Working Tax Credit claimants across the UK.
- Extension to the VAT cut to 5% for hospitality, accommodation, and attractions across the UK until the end of September, followed by a 12.5% rate for a further six months until 31st March 2022.
- 750,000 eligible businesses in the retail, hospitality, and leisure sectors in England will benefit from business rates relief.
- Extension of the apprenticeship hiring incentive in England to September 2021 and an increase of payment to £3,000.
- £7 million for a new “flexi-job” apprenticeship programme in England, that will enable apprentices to work with a number of employers in one sector.
- Additional £126 million for 40,000 more traineeships in England, funding high-quality work placements and training for 16-24-year-olds in 2021/22 academic year.
- More than doubling the legal limit for single contactless payments, from £45 to £100
- £10 million to support veterans with mental health needs across the UK.
- £19 million to tackle domestic abuse in England and Wales, with funding for a network of ‘Respite Rooms’ to support homeless women and a programme to prevent reoffending.
- £90 million funding to support our government-sponsored national museums in England due to the financial impact of Covid-19.
- £300 million for major spectator sports, supporting clubs and governing bodies in England as fans begin to return to stadia.
- Small and medium-sized employers in the UK will continue to be able to reclaim up to two weeks of eligible Statutory Sick Pay (SSP) costs per employee from the Government.
- To further support the cashflow of businesses, the government is extending the loss carry back rules worth up to £760,000 per company.
- £100 million for a new Taxpayer Protection Taskforce to crack-down on COVID fraudsters who have exploited UK Government support schemes.
Strengthening the public finances
- Maintaining the income tax Personal Allowance and higher rate threshold from April 2022 until April 2026.
- To balance the need to raise revenue with the objective of having an internationally competitive tax system, the rate of Corporation Tax will increase to 25%, which will remain the lowest rate in the G7. In order to support the recovery, the increase will not take effect until 2023. Businesses with profits of £50,000 or less, around 70% of actively trading companies, will continue to be taxed at 19% and a taper above £50,000 will be introduced so that only businesses with profits greater than £250,000 will be taxed at the full 25% rate.
- Maintaining inheritance tax thresholds at their current levels until April 2026.
- Fuel duty will be frozen for the 11thconsecutive year.
- Alcohol duties will be frozen across the board for the second year running saving drinkers £1.7 billion.
- Capping the amount of SME payable R&D tax credit that a business can receive in any one year at £20,000 (plus three times the company’s total PAYE and NICs liability).
- Maintaining the Lifetime Allowance at its current level of £1,073,100 until April 2026.
- The adult ISA annual subscription limit for 2021-22 will remain unchanged at £20,000.
- Beginning April 2021, the new super-deduction will cut companies’ tax bill by 25p for every pound they invest in new equipment. This is worth around £25 billion to UK companies over the two-year period the super-deduction will be in full effect.
- Eight new English Freeports will be based in East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames, and Teesside.
- The £375 million UK-wide ‘Future Fund: Breakthrough’ will invest in highly innovative companies such as those working in life sciences, quantum computing, or cleantech, that are aiming to raise at least £20 million of funding.
- Reforms to the immigration system will help ambitious UK businesses attract the brightest and best international talent.
- A new Help to Grow scheme to offer up to 130,000 companies across the UK a digital and management boost.
- £2.8 million to support a UK and Ireland bid to host the 2030 World Cup and £25 million investment in UK grassroots sports, enough for around 700 new pitches.
- Launching a review of Research & Development tax reliefs to make sure the UK remains a competitive location for cutting-edge research.
- £20 million to fund a UK-wide competition to develop floating offshore wind demonstrators and help support the government’s aim to generate enough electricity from offshore wind to power every home by 2030.
- £68 million to fund a UK-wide competition to deliver first-of-a-kind long-duration energy storage prototypes that will reduce the cost of net zero by storing excess low carbon energy over longer periods.
- £4 million for a biomass feedstocks programme in the UK to identify ways to increase the production of green energy crops and forest products that can be used for energy.
- Publication of the government’s ‘Build Back Better: our plan for growth’.
- Over £1 billion funding for a further 45 towns in England through the Towns Fund, supporting their long-term economic and social regeneration as well as their immediate recovery from the impacts of COVID-19.
- £135 million to progress A66 Trans-Pennine upgrade.
- £28 million to fund the Queen’s Platinum Jubilee celebrations in 2022, delivering a major celebration for the UK.
- Plans for at least £15 billion of green gilt issuance in the coming financial year, to help finance critical projects to tackle climate change and other environmental challenges, fund important infrastructure investment, and create green jobs across the UK.
- £150 million Community Ownership Fund will allow communities across the UK to invest to protect the assets that matter most to them such as pubs, theatres, shops, or local sports clubs.
- £18.8 million to transform local cultural projects in Hartlepool, Carlisle, Wakefield, and Yeovil.
- Publication of the prospectus for the £4.8 billion UK-wide Levelling Up Fund, providing guidance for local areas on how to submit bids for the first round of funding starting in 21-22.
Further information regarding the measures adopted for Scotland, Wales, and Northern Ireland, as well as the full extent of the measures, is available on the Government’s website.
The Corporate and Commercial team at Fisher Jones Greenwood LLP can assist you with any questions you may have regarding the 2021 Budget and how this may affect you and/or your business.